Is a VMT Tax a Good Idea?

Late last month the Associated Press reported that San Francisco transportation officials will study the idea of implementing a tax on vehicle-miles traveled as a way of decreasing congestion and increasing roads funds. The plan would charge drivers anywhere from fractions of a penny per mile up to a dime depending on the time of day. Based on current driving patterns, the mileage tax could deliver the Bay a daily revenue in the area of $15 million.

To date the American public has shown little but disdain for the idea of a VMT tax. As Emily Badger reported last fall, some people consider the thought of someone watching over our odometers too "creepy," while others merely distrust the government's ability to spend the money wisely on road funding. Slate crowned the recent Bay plan its "bad idea of the week."

So there are concerns about privacy and taxation and legislative competence. Beyond those, it's legitimate to wonder whether a VMT tax would actually be a good idea. A review of the literature responds to that curiosity with a qualified yes.

For sure, a system for measuring vehicle mileage would accurately measure vehicle mileage. A recent national field study of roughly 2,650 drivers, conducted by the University of Iowa [PDF], successfully captured about 92 percent of miles driven. That bodes well for transportation experts eager to see a VMT fee system replace the current gas tax [PDF], whose depleted financing power will be further depleted as fuel-efficiency improves.

The communication infrastructure is also there. Mileage data can be captured via GPS or, if tracking exact vehicle location makes you wary, via a non-GPS odometer system that leverages standard car technology. During a transition phase a VMT system can be integrated with existing fuel pumps to make sure drivers who pay mileage fees don't also pay a gas tax. Critically, VMT can be aggregated by zones — to separate use of rural and urban roads, for instance — allowing for a more equitable user system in which the busiest roads receive the most money.

So the shift would be pretty seamless. In fact, once people experience just how smooth it is, they warm up to the idea of replacing a gas tax with a mileage tax. In the Iowa study, roughly 41 percent of participants expressed a positive feeling toward a VMT fee before the trial, and roughly 70 percent expressed a positive feeling after it.

A tax on vehicle-miles traveled would also decrease vehicle-miles traveled, but just how much is an open question. Statistical models suggest a pretty significant impact. A recent simulated VMT tax of five cents a mile in the Sacramento area resulted in a 10 percent reduction in VMT. Another simulation in the Washington, D.C., area found that a tax of 10 cents per mile led to a 14 percent mileage decline [PDF]. The VMT simulations also show a substantial drop in energy use — transportation energy, for sure, but also household energy, which is reduced through dense development encouraged by the VMT system.

Pilot studies have been a bit less conclusive, but generally suggest mileage trends in the expected direction. A recent trial of VMT fees in for 475 drivers in Atlanta found a 3 percent drop in mileage traveled, though researchers couldn't conclude that pricing had caused the drop. A trial of 500 cars in Seattle, Washington, reduced mileage 12 percent, though that included a very steep congestion charge of 50 cents a mile during evening rush hour [PDF].

A third trial [PDF] in Portland, Oregon, suggested that any VMT fee system will likely need some congestion pricing elements to succeed. For the study, some drivers paid a flat 1.2-cent mileage fee, some paid a congestion-based fee that ranged from .43 cents a mile at low periods to 10 cents during peak travel inside metropolitan Portland, and some (a control) paid the typical gas tax. Both VMT groups drove less than the control group. The flat group showed only a modest drop in VMT, however, while the congestion group decreased mileage by 22 percent at peak hours.

This review isn't intended to be exhaustive. Plenty of concerns remain. A VMT fee does nothing to encourage greener cars, could be susceptible to tampering (at least more so than a gas tax), and creates a rate-equity debate with rural and possibly even suburban drivers who lack reliable transit options. On that note, any mileage system would also need to consider how much of its intake should go toward public transportation.

So the details need more consideration, and San Francisco has more time. Any implementation of a VMT system by the Bay remains many years away, one official told Wired's Autopia blog. All the city has decided for certain is that the idea itself is good enough to merit a serious public debate. The technology is here, and empirical justification isn't too far behind, and the need is arguably past.